Municipal officer's expense allowance

A municipal corporation or board may pay a non-accountable expense allowance to an elected officer to perform the duties of that office.

If the expense allowance is more than one-third of the officer's salary and allowances, the excess amount is a taxable benefit. Enter it in box 14, “Employment income,” and in the “Other information” area under code 40 at the bottom of the employee’s T4 slip.

If the expense allowance is not more than one-third of the officer’s salary and allowances do not include this amount in box 14, “Employment income,” or in the “Other information” area under code 40 at the bottom of the employee’s T4 slip.

In either of the above situations, you have to identify the non-taxable share of the allowance by entering the corresponding amount in the “Other information” area under code 70 at the bottom of the employee’s T4 slip.

For more information, see Interpretation Bulletin IT292, Taxation of Elected Officers of Incorporated Municipalities, School Boards, Municipal Commissions and Similar Bodies.

Note 

For 2019 and later tax years, non-accountable allowances paid to elected officers will be included in their income. This change was stated in the 2017 federal budget, which received royal assent on June 22, 2017 (Bill C 44).

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